"Why Washington Saved the Economy, Then Permanently Destroyed the Labor Market"

[applegrove]

Why Washington Saved the Economy, Then Permanently Destroyed the Labor Market

by Derek Thompson at the Atlantic

http://www.theatlantic.com/business/archive/2013/05/why-washington-saved-the-economy-then-permanently-destroyed-the-labor-market/275747/?google_editors_picks=true

"SNIP............................


Even if money doesn't always change the outcome of political debates, it shapes what debates we have. We didn't have a debate about whether we should extend the payroll tax in December 2012. But we did have a debate about whether we should raise taxes on families making more than $250,000. Congress didn't vote to cancel the sequester when it learned it would cut unemployment benefits and assistance to low-income households. But it did cancel the FAA cuts when frequent flyers complained about security lines and departure times. Nobody on Capitol Hill is talking about long-term joblessness. We're still debating carried interest and the Volcker Rule.


I'm paid to spend my day reading economic papers and asking people to explain their conclusions. Spending my time this way has persuaded me that long-term unemployment is a national emergency that is both devastating millions of families and making the country permanently poorer.


Politicians have a slightly different information diet. They spend more time gleaning information from lobbyists and rich donors whose concerns and opinions graft themselves onto representatives as easily as the pithiest economists' opinions attach themselves to me. If politicians naturally gravitate to the issues rich folks want to talk about, it doesn't make them bad people. It makes them normal people in a broken system that elevates polarization -- both between parties and between the priorities of high-income and low-income families -- while subtly concealing the issues that most affect Americans who cannot afford a lobbyists' luncheon or a number on a congresswoman's speed-dial.

The centrality of big money in politics makes it nearly impossible for an issue like long-term unemployment to buy a sliver of mindshare. Our priorities are shaped not only by the stories we choose to believe, but also the stories we happen to hear, from the ideas we give a hearing ...

...........................SNIP"

[xchrom]

1. Du rec. Nt

[RainDog]

2. k&r

the failure of the nation's political leaders to respond to what has happened to the middle class is a scandal and demonstrates the utter contempt politicians have for average Americans if something is going to make a trust fund baby cry.

[duffyduff]

3. It's deliberate policy to force living standards to third-world levels. n/t

[AdHocSolver]

4. The economy wasn't saved. It is just collapsing more slowly.

The economy is driven by the demand for goods and services.

The middle class is the main driver of that demand.

The middle class gets the money it spends mainly by earning income from jobs. Governments get their revenue largely from income taxes.

The economy shrinks when the number of jobs decrease and the income earned by labor decreases.

The government did not "save" the banks. The bailouts only saved the bankers from the consequences of their greed and lawlessness.

What would have helped the economy more is to have removed the bankers responsible for the financial crisis, broken up the banks that are considered "too big to fail", reinstated the Glass-Steagall Act, and provided just enough stimulus to increase demand.

What the government did was give the crooked bankers enough assistance to start a new round of financial scams and continue their ability to profit from a collapsing economy.

This reason why the stock market is booming while unemployment is still high is because the stock market is being driven by the tons of essentially "free" credit issued by the Federal Reserve. Wall Street is having fun pouring money into the stock market, which is what drives the stock prices up, and then selling the stock at a peak, which drops the price, to start a new round of speculation.

The stock market does not drive the economy. Demand for goods and services largely by the middle class drives the economy.

The stock market is nothing but the embodiment of "trickle down" economics.

[mrdmk]

5. You said this better than I could have

K & R

[Starry Messenger]

6. +++